Spencer Stuart Sues Departed Exec, Rival Firm

March 31, 2017 – Chicago headhunter Spencer Stuart is going after an unlikely head: the former leader of its global automotive practice who left for an archrival.

The executive search firm this week sued Francois Truc, who left Spencer Stuart in December, and Korn Ferry, the firm that hired him this month. According to the suit, together Truc and Korn Ferry “are attempting to dismantle Spencer Stuart’s global automotive practice and move that business lock, stock and barrel to Korn Ferry.”

A spokeswoman for Los Angeles-based Korn Ferry did not immediately comment on the lawsuit. Truc did not immediately respond to a message seeking comment.

Korn Ferry reported $1.35 billion in revenue in 2016, making it the largest search firm in the world. No. 2 Spencer Stuart reported $699 million in 2015 revenue, according to industry news source Hunt Scanlon Media.

Among the five search firms that dominate the industry, Spencer Stuart is well known for its expertise in boardroom searches and placing executives in the financial and automotive industries. It has conducted more than 500 searches for automotive senior executives or board members in the past three years and “has access to more than 55,000” auto execs worldwide, its lawsuit says. A contract with one client, Nissan, “has generated millions of dollars in revenue.”

The search industry is competitive, “requiring a combination of pricing, market contacts, effective search strategies and interpersonal skills for success,” says the lawsuit, filed in Cook County Circuit Court. One search can yield “hundreds of thousands” in revenue.

Spencer Stuart has asked the court to stop Truc and Korn Ferry from using proprietary information it alleges the departing executive improperly copied, and to enforce Truc’s noncompete agreement.

A Spencer Stuart spokesman declined to comment.

NONCOMPETE ENFORCEMENT RARE

Although noncompete agreements are common for high-level headhunters, it’s rare to see them enforced, said Chris Hunt, president and publisher at Hunt Scanlon Media. Search firms don’t want to limit their own ability to recruit headhunters from competitors.

“They’re all poaching from each other all the time,” he said. “This must have been an enormous monetary loss for Spencer Stuart for them to have gone and sued Korn Ferry.”

The lawsuit accuses Truc, who started at Spencer Stuart in 2008 and earned total compensation of $4 million for fiscal years 2015-2016, of persuading a junior recruiter to decamp for Korn Ferry. This recruiter mailed information to his personal email address and copied files to a USB drive in the days before his December resignation, the lawsuit alleges. The data included reports on two searches for vice president positions at Nissan.

Truc resigned in December after also sending proprietary information to his personal email, the lawsuit alleges. He told Spencer Stuart CEO Kevin Connelly that he would join Nissan as head of executive recruiting and strategic projects. But “after his resignation, Truc bragged to other participants in the industry that his period of employment at (Nissan) was a subterfuge to run out Spencer Stuart’s non-competition election period.”

Nissan is not a defendant in the lawsuit.

Korn Ferry announced March 1 it had hired Truc, a Wharton School graduate and Booz Allen Hamilton alum. The lawsuit says Spencer Stuart notified Truc on March 28 that it would enforce the rest of his “noncompetition restriction” and offered to keep paying his base salary “for the duration of the restricted period” plus no less than $200,000 in addition. Truc rejected the demand, the suit says.